Analysis: New California poker bill could end tribal standoff

Posted on May 16, 2013 by r.weston

The drafting of two tribe-backed bills this year is sparked by Nevada launch and Cali Senator Rod Wright’s unpopular legislation

As details emerged yesterday of a new California online poker bill backed by eight tribes including the highly influential Pechanga, a key message was sent to the state’s tribes and politicians.

Whereas 12 months ago most of California’s tribes were divided over if and how online poker should be legalised in the state, this year there is impetus for these groups to work together to create their own language to suit the needs of the Native American community. Rather than criticise or suggest varying amendments to Senator Roderick Wright’s bill – which almost all were unanimously united against – two tribe-backed bills are now in circulation, with another influential Native American tribe, San Manuel, having drafted one already earlier this year.

Frustrated by Wright’s bill which would allow state racetracks to offer online poker and would have insisted tribes waive their sovereignty during the licensing process, the state’s tribes have instead decided to take matters into their own hands. And that could finally mean a breakthrough.

Michael Lombardi, chairman of the Gaming Commission of the Augustine Band of Cahuilla Indians, told eGaming Review the dissolution of the influential COPA consortium last year has also helped reduce the difference of opinion existing among the tribes, as well as concerns of a power shift to Nevada or federal government. The Pechanga-backed bill would rule out interstate compacts, something Nevada, with its limited population, is already pushing hard for.

“Senator Rod Wright’s legislation has galvanised opposition of all the tribes,” Lombardi said. “For most of them, if not all, the time has come for online poker in California. New Jersey and Nevada have taken their attention, and the last thing the tribes want is an interstate agreement with Nevada, or a federal bill giving all the power to Washington”.

With two tribe-backed draft bills circulating this year, legalised online poker in a state with a population of approximately 37.7m is finally beginning to look achievable. Lombardi went as far as giving a bill a “50-50 chance” to be passed later this year as an emergency measure, however other sources pointed towards 2014 as a far likelier target.

Any bill would have to go through the Senate Governmental Organisation Committee, chaired by Wright himself, whose bill is still the only one to actually be introduced in the state legislature.

Below eGR analyses the potential of each of the three California online poker bills, starting with the proposal which emerged this week..

The Internet Poker Consume Protection Act of 2013

The draft bill was sent to tribal leaders this week and is backed by eight tribes including Pechanga, Agua Caliente and Borona, and would allow tribes and card rooms to apply for a 10-year licence, but not racetracks.

The legislation has been crafted to ensure the majority of any revenues from online poker go to tribal groups first and foremost. It requires California to opt out of any future federal bill, as well as “internet gambling agreements between states or foreign jurisdictions”.

Moreover, in what seems to be a provision to prevent businesses outside California buying their way in to the market as an operator on the back of a tribe’s licence, “licensees must be able to pay upfront fees and establish [an] online poker business based on its own creditworthiness and assets”. In contrast, 888 plans to offer a B2C poker site in Nevada through Treasure Island’s licence, with funding from the All American Poker Network.

Although this would seem to price smaller tribes out of the market, the legislation calls for “reasonable fees” which are “not to exceed rationally based expected costs”. By way of comparison, Wright’s original legislation imposed a prohibitive $30m licence fee.

The legislation also calls for a ‘bad actor’ clause to block any operator that continued to operate in the States after the passage of UIGEA in 2006, and excludes racetracks from applying for a licence, while a go-live date of 1 January 2015 would be enforced.

Although Pechanga chairman Mark Macarro is in talks with state politicians to address the issue, the bill currently has no sponsor and no agreed licence fee or tax rate, making it very much a work in progress.

With eight tribes putting their name to the bill, it is the clearest sign yet they are ready to collaborate to help bring legalised online poker to California. This sentiment is expressed in the co-written cover letter, pointing out “reacting to proposals by the state and commercial interests was not the best way to arrive at a set of principles and policies”.

The tribes plan to meet in two weeks’ time to discuss the bill and any changes they wish to see.

Authorisation And Regulation Of Internet Poker And Consumer Protection Act Of 2013

Correa’s bill is also in draft form and is backed by San Manuel, one of the first tribes to quit COPA last year amid frustration at a lack of progress over online gambling regulation.

Few details have been released so far, except for the tax rate, set at 10% of gross gaming revenue. Similar to the Pechanga bill, the legislation would only allow tribes and card rooms to apply for a licence.

The bill is very similar to the Pechanga bill, with the key difference being that Correa outlines a three-tiered licencing process, depending on a licensed tribe’s level of involvement and gross gaming revenues.

Lombardi told eGR this bill and the Pechanga bill “could become one bill” at a later date because of their similarities, in a bid to gather more united support, with tribes set to meet this Friday to further discuss the bill’s specific provisions.

The Internet Gambling Consumer Protection And Public-Private Partnership Act of 2012

Senator Wright’s bill has been under consideration in the state legislature since early last year, although it was only changed to cover just poker in June.

Due to opposition from tribes against the $30m licensing fee, eligibility of state racetracks and ADW firms, as well as the requirement to waive sovereignty during the licensing process, Wright took his bill off a Senate committee agenda.

However Lombardi said that following the two tribal draft bills, “Wright’s legislation will go nowhere, it won’t get out of committee”.

New Pechanga-backed California bill circulated

Posted on May 15, 2013 by r.weston

Legislation would include ‘bad actor’ clause and exclude racetracks from applying for a licence

A new draft bill to legalise online poker in California has been sent to tribal leaders and is backed by eight tribes including Pechanga, Agua Caliente and Borona.

The draft legislation proposes tribes and card rooms that have held approval to operate land-based businesses for at least five years can apply for 10-year online licences. The bill also calls for a ‘bad actor’ clause to block any operator that continued to operate in the States after the passage of UIGEA in 2006, and excludes racetracks from applying for a licence.

A source close to the matter told eGR the draft bill was finalised on Monday this week following months of talks. He also said the legislation remains a work in progress, with no sponsor on board and finer details such as a rate of taxation and licence fee yet to confirmed.

The new proposed California legislature offers no time period for allowing companies who took bets post-UIGEA into the market, deeming them “unsuitable for any licence under this bill”. While New Jersey’s legislation removed such a provision in December last year, a similar clause was added to Nevada’s egaming laws in February, excluding operators taking bets after UIGEA for five years.

Unlike the bills put forward by Wright and Correa, the legislation would not accept applications from racetracks. While this measure will be popular with tribes, it is likely to lead to criticism from racing entities and Wright, who serves as chairman of the Senate Governmental Organisation Committee where any egaming bill introduced would face a hearing.

There are now three bills in contention in California, including one proposed by Senator Rod Wright. An eGR source revealed the San Manuel tribe was involved in initial discussions for the new bill, but dropped out to back the legislation sponsored by Senator Lou Correa.

Similar to Correa’s bill, but unlike Wright’s, this new bill would also allow tribes to retain their sovereignty while applying for a licence.

The bill would enforce a go-live date of 1 January 2015, with the California Gambling Control Commission required to release egaming regulations within 270 days of the bill’s passage. Once a tribe has submitted its licence application, the Commission would have 90 days to review it.

The other tribes supporting the bill are the Yocha Dehe Wintun Nation, Lytton Band of Pomo Indians, Pala Band of Mission Indians, Paskenta Band of Nomlaki Indians and Viejas Band of Kumeyaay Indians.

It had been rumoured Pechanga, whose chairman is Mark Macarro (pictured), would seek to introduce its own bill rather than back Correa’s.

The legislation also includes measures ensuring tribes ensure player identity and location verification, segregated accounts for customer funds and the prohibition of bots.

Betfair Hollywood Park to close this year

Posted on May 10, 2013 by r.weston

Racetrack closure is a further setback to Betfair’s California exchange wagering plans

California racetrack Hollywood Park will close at the end of 2013, one year after securing a five-year naming agreement with Betfair.

The closure will come as a blow to Betfair, who had hoped to offer exchange betting at the racetrack in the future.

In a letter sent to the California Horse Racing Board (CHRB), Betfair Hollywood Park president Jack Liebau said attempts to improve the struggling racetrack’s business model were “without success”, in particular after spending “millions” in vain on lobbying to offer slot machines.

“In the absence of a favourable change in racing’s business model, the ultimate development of the Hollywood property was inevitable,” he said. “Sadly for we who love racing and Hollywood Park, it was simply a matter of time.”

The 75-year-old racetrack had been owned by Churchill Downs between 1999 and 2005 before being sold to the Hollywood Park Land Company consortium.

Although exchange wagering is not yet operational in California, the CHRB approved rules last year and issued provisional licences to Betfair TVG and Churchill Downs. However, in March, the Office of Administrative Law disapproved of the regulations, requiring the CHRB to resubmit them.

However, the Thoroughbred Owners of California have delayed a vote on whether it would accept exchange betting at the state’s thoroughbred tracks until the summer.

The 75-year-old Hollywood Park racetrack was also owned by Churchill Downs between 1999 and 2005.

Betfair acquired horse racing TV and wagering network TVG for US$50m in 2009 with a view to launching a betting exchange in California as soon as it became legal to do so.

California tribal group backs AGA on PokerStars stance

Posted on March 7, 2013 by r.weston

California Tribal Business Alliance condemns New Jersey’s lack of ‘bad actor’ clause against post-UIGEA operators

The California Tribal Business Alliance (CTBA) has backed a call by the American Gaming Association (AGA) for New Jersey gaming regulators to block PokerStars’ licensure in the state.

This week the AGA, which represents operators including Caesars Entertainment and Boyd Gaming, argued that Stars has a history of “systemically flouting US law” as part of a 28-page document filed with New Jersey’s Casino Control Commission.

The CTBA has previously been critical of New Jersey for not including a ‘bad-actor’ clause preventing operators which accepted post-UIGEA bets in its recent legislation, with CTBA chairman Robert Smith arguing that the state “appears to be weakening the eligibility requirements needed to obtain a gaming licence”.

Now following the AGA’s brief, Smith said: “If other states are content to weaken their standards in a desperate attempt to cobble together gaming laws that swing the doors of the industry open to whomever wants to walk in, then we need a barrier between what other states are trying to do and what California Tribal Governments are succeeding at. At the end of the day, given what’s at stake for tribal governments, we need to hold firm and do what we know is right.”

The CTBA represents the Lytton Band of Pomo Indians, the Paskenta Band of Nomlaki Indians and the Pala Band of Mission Indians, which owns one of the biggest Indian casinos in the state.

California Senator Lou Correa has introduced an online poker bill in the state legislature, which is sponsored by the San Manuel Band of Serrano Mission Indians. eGR NA understands that a meeting is taking place this week in a bid to agree key provisions with the Pechanga Band of Luiseño Indians and the Agua Caliente Band of Cahuilla Indians.

Stars is currently waiting to hear whether it will receive an interim casino operator licence which will allow it to complete the acquisition of The Atlantic Club Casino, a deal which could protect around 2,000 jobs. It shut down its US-facing operations in April 2011 following the Black Friday indictments and later reached a $731m settlement with the US Department of Justice in July without admitting any wrongdoing.

Cali tribes set for Correa bill negotiations

Posted on February 26, 2013 by r.weston

San Manuel currently sponsoring Senator’s online poker bill – negotiations to gain support of other major tribes imminent

The San Manuel Band of Serrano Mission Indians has emerged as the key sponsor behind Senator Lou Correa’s newly-introduced online poker bill, with a meeting set for mid-March in a bid to agree key provisions with the Pechanga Band of Luiseño Indians and the Agua Caliente Band of Cahuilla Indians, eGR North America has learned.

Correa filed a placeholder bill SB 678 on Friday to beat the deadline for submitting legislation for the current session. The 77-word long document outlines the intention to authorise the California Gambling Control Commission to issue licences to operators and to regulate online poker within the state.

Sources close to the matter have told eGR NA that San Manuel supporting the bill alone, however it is understood that it hopes to win the backing of several other California tribes in order to reach a consensus before formally introducing the bill.

This would represent the first coming together of Native American groups since the California Online Poker Association (COPA) disbanded last year following San Manuel and Morongo Band of Mission Indians’ exit from the coalition.

COPA, a venture formed between card rooms and Indian casinos to expedite the progress of online poker legislation in the state, was opposed by both Pechanga and Agua Caliente.

But while one source confirmed that these tribes do not currently back the San Manuel-backed Correa bill, negotiations will take place next month with the aim of gaining their support.

Correa’s previous legislation was introduced in 2011 and faced accusations that it favoured COPA. However with the consortium no longer in existence, the support of some of California’s most influential tribes could be a significant step for Correa to see his legislation succeed in the state legislature.

Last month Pechanga chairman Mark Macarro told eGR NA he had disagreed with COPA’s approach to securing online poker legislation: “Moving the conversation forward about Internet poker was a huge undertaking, and we applaud Morongo and San Manuel for having the stomach to bring this issue to the fore.”

Correa’s last bill did not include racetracks as eligible entities for offering online poker, a feature which has seen Senator Rod Wright’s bill heavily criticised by tribes, and although the specific language of SB 678 is yet to be revealed, it is seen as highly unlikely Correa would make this change and risk losing the coveted support of influential tribes.

Cali exchange wagering verdict due next month

Posted on February 25, 2013 by r.weston

Exchange betting rules could come into effect by 15 March

Exchange betting rules proposed by the California Horse Racing Board (CHRB) could come into force with immediate effect once approved by the Office of Administrative Law (OAL), with a decision due by 15 March.

The CHRB unanimously voted in favour of the provisions, which would also include in-play betting and allow out-of-state residents living in regulated exchange betting states to wager on California races, in November, but OAL approval is also required before the rules can be officially enforced.

After OAL authorisation, the CHRB would then begin implementing oversight measures and recruiting new personnel to regulate exchange betting, likely to be dominated by British operator Betfair and Churchill Downs, which shared a provisional US$530,000 licence fee issued last year.

CHRB assistant executive director Jackie Wagner explained at a board meeting last week that she expects to receive the OAL’s verdict on the proposals by 15 March, after the CHRB submitted them on 31 January.

Files also require Secretary of State approval and although they would usually become effective on a quarterly basis, in this case 1 July, Wagner said the CHRB is allowed to request an effective-upon-filing stipulation, which it has already asked for.

If the OAL does not approve of the proposals, the CHRB would be entitled to 120 days to make changes.

Betfair acquired horse racing TV and wagering network TVG for US$50m in 2009 with a view to launching a betting exchange in California as soon as it became legal to do so.

However, the Thoroughbred Owners of California (TOC) have delayed a vote on whether it would accept exchange betting at the state’s thoroughbred tracks until the summer.

New California online poker bill introduced

Posted on February 25, 2013 by r.weston

Senator Lou Correa files placeholder bill SB 678 two years after his last legislation failed

California Senator Lou Correa has introduced online poker legislation in the state legislature, meaning there are now two egaming bills currently under consideration.

Correa filed a placeholder bill SB 678 on Friday to beat the deadline for submitting legislation for the current session, while Senator Rod Wright reintroduced his bill in December last year. Neither bill has a date scheduled for a committee hearing yet.

As a placeholder bill, Correa’s legislation is brief and scarce on details, but more language will be introduced once it reaches the committee stage. As it stands, the 77-word long document outlines the intention to authorise the California Gambling Control Commission to issue licences to operators and to regulate online poker within the state.

Correa’s previous legislation in 2011 was accused of favouring the now disbanded California Online Poker Association (COPA) and initially limited the number of eligible licence applicants to five. The licence fee was set at US$50m each.

Earlier last year Wright took his original legislation off a Senate committee agenda due to a reported lack of support, yet the bill he introduced in December retains all the main clauses.

Wright’s bill has been criticised by tribes for including advance deposit wagering (ADW) firms as eligible online poker licensees despite their current lack of involvement in the vertical.

The legislation also retains the contested requirement that tribes waive their sovereignty during suitability checks as part of the licensing process.

Exclusive: No amendments to Wright’s Cali bill

Posted on December 7, 2012 by t.washington

Unchanged bill likely to face same opposition as SB 1463, dramatically pulled from Senate committee last June due to lack of support

California Senator Roderick Wright will introduce an unchanged online poker bill in January despite failing to attract sufficient support during the last legislative session, eGR North America has learned.

The politician had already confirmed plans to continue his fight to bring legal online gambling to the state, however after SB 1463 was dramatically pulled from the Senate Governmental Organisation Committee in June, Wright was expected to ring the changes to boost its chances of passing in 2013.

The bill faced significant opposition from Native American groups, including the powerful Pechanga and Morongo tribes, the latter as part of the California Online Poker Association (COPA), the now-defunct coalition of 29 tribes and 31 card rooms.

Criticism from such groups focused on Wright’s inclusion of advance deposit wagering (ADW) firms, namely Churchill Downs and Betfair TVG, as eligible online poker licensees. California’s tribes argue that these companies have no involvement in poker currently and therefore should not be part of any online poker industry.

Many close to the legislation believe Wright was willing to remove this provision, however a source told eGR NA the senator will “continue where he left off” in June and that Wright is determined to retain the provision “as a bargaining chip” with tribes.

Other sticking points in the bill include the obligation of tribes to waive their sovereignty in order to undergo the thorough suitability checks during the licensing process.

Wright will hope the dissolution of COPA will make his job of achieving consensus easier. Its members presented a 73-page proposed set of amendments to the bill in August, indicating it would back the legislation should Wright agree to its terms. The proposals included requests to deny racing associations the right to be eligible licence applicants and to extend the initial licence term from five to 10 years.

Exchange betting approved in California

Posted on November 16, 2012 by r.weston

Horse Racing Board also approves provisional licences for Betfair TVG and Churchill Downs

The California Horse Racing Board (CHRB ) has approved rules that could see exchange betting permitted in the state in 2013.

At its meeting at Betfair Hollywood Park yesterday the CHRB also approved provisional licences for Betfair TVG and Churchill Downs to conduct exchange wagering in California races once the rules have been finalised.

The news will come as a significant boost to the operators after the Thoroughbred Owners of California (TOC) delayed a vote on whether to allow exchange betting at the state’s thoroughbred tracks until 2013 in June.

The company has agreed to pay up to US$530,000 for the licence, which would become active once the Office of Administrative Law (OAL) finalises the rules. Betfair US CEO Stephen Burn said yesterday the company has invested $10m in a new betting exchange in California.

Churchill Downs revealed in its most recent financial results this month that it is developing an exchange wagering product to be offered through its successful Twinspires.com site.

The Kentucky operator agreed to share the licence fee with Betfair, with the CHRB explaining that the money would allow it to put new exchange wagering oversight measures in place, including new software, personnel, and training of the personnel.

Betfair acquired horse racing TV and wagering network TVG for US$50m in 2009 with a view to launching a betting exchange in California as soon as it became legal to do so.

Plans for exchange betting have long divided opinion among racing stakeholders in California, in particular the ability to lay a bet on a losing horse.

Tom Washington

Rod Wright: I’ll keep fighting for online gambling in Cali

Posted on September 11, 2012 by t.washington

California Senator to reintroduce bill in January – has reached agreements with stakeholders “three or four times” in the past

California Senator Rod Wright has vowed to continue his fight to bring legal online gambling to the state, despite his latest efforts, a co-sponsored bill with fellow Senator Darrell Steinberg, failing to garner enough support to prevail before the 31 August legislative deadline.

SB 1463 faced significant opposition from Native American groups, including the powerful Pechanga and Morongo tribes, the latter as part of the California Online Poker Association (COPA), a coalition of 29 tribes and 31 card rooms.

However Wright, who dramatically pulled his online poker bill from the Senate Governmental Organisation Committee in June due to lack of support, confirmed to eGR NA that he will reintroduce a bill in January.

The main obstacles remain the tribe’s desire to exclude the state’s racetracks from being able to offer online poker, as well as a clause which would oblige them to waive their sovereignty in order to undergo the thorough suitability checks during the licensing process.

Despite these concerns, along with an overarching fear among tribal groups that the legislation will cannabilise the revenues of their bricks and mortar casinos, Wright remains confident of reaching a universally accepted bill.

Indeed, he confirmed that he had in fact struck several agreements with tribal groups to progress the bill, only for lawyers to intervene to scupper the deal at the last minute.

“Nobody trusts anyone right now,” he said. “Fear is a very difficult emotion to overcome. I’ve had agreements three or four times but they have fallen apart.

“But if federal government makes any modifications to intrastate online gambling law then we will all feel very stupid as our opportunity to compete will have gone.”

He also confirmed that talks with stakeholders will continue over the coming months but could not confirm whether his co-sponsor Darrell Steinberg would re-join the efforts in the next legislative session.

Wright, who has been actively pursuing the regulation of online gambling and sports betting in California for almost four years, also refused to rule out the possibility of other politicians “making a run” with their own bill. “I’m not seeing it at the moment, but you never know,” he said.

Senator Wright will be speaking at eGR North America’s invite-only Power Summit in Laguna Beach, California, this week.